In a recent case heard by Beijing No.1 Intermediary Court, Mr. Zhang obtained an offer letter from Company A, which provided that Mr. Zhang would be employed as the content chief editor for 3 three years with a commencement date of June 29, 2015, on which the company would sign an employment contract with Mr. Zhang. However, on June 18, when Mr. Zhang departed from his former employer and reported to Company A for employment, he was informed that the company would not sign the employment contract with him, because the company was now under a layoff and dissolution process. The judge of the first instance court decided that Company A should compensate Mr. Zhang on the ground that it had violated the principle of good faith by informing Mr. Zhang of the layoff and dissolution decision after he had departed from his former employer. The two parties agreed on a mediation agreement during the second instance procedure, according to which the company would pay approximately RMB 40,000 to Mr. Zhang, which is almost the same amount of compensation ruled by the court of the first instance. If the company could not sign the employment contract with a potential employee after providing the offer letter, it should duly inform the individual, otherwise it may be deemed as performing culpa in contrahendo and may be held to compensate for any losses caused thereby.
China